The Exhibition Industry Declined (5.7%) in the Fourth Quarter and (3.1%) for the Year

Industry Posts First Annual Decline Since 2002

New York March 30, 2009 – In 2008, the exhibition industry experienced its first annual decline since 2002, decreasing (3.1%) versus 2007, led by declines of (6.0%) and (5.7%) in the third and fourth quarters of 2008, respectively, according to the CEIR (Center for Exhibition Industry Research) Index, a leading measurement of exhibition industry performance. However, since the start of the Index in 2000, the industry has grown positively, at a compound annual growth rate (CAGR) of 1.8%.

Exhibition Industry Sector Performance

Of the 11 industry sectors measured by the CEIR Index, only four grew in 2008: Information Technology (+9.8%); Raw Materials (+3.4%); Medical and Healthcare (+1.3%); and Industrial (+1.1%). On the flip side, the Building and Construction sector saw the largest decline for the year, of (9.8%). Other sectors that underperformed the overall exhibition industry in 2008 included: Consumer Goods (-7.0%); Transportation (-5.9%); Professional Business Services (-5.1%); and Government (-3.9%).

All four key exhibition industry metrics declined in 2008, versus 2007: Net Square Feet (-2.0%); Exhibitors (-2.6%); Attendance (-4.0%); and Revenue (-3.5%). And, only the Information Technology and Raw Materials sectors showed gains across all four metrics for the year.

Exhibition Industry vs. GDP

The exhibition industry tends to track fairly well with Gross Domestic Product (GDP). In 2008, the growth rate for real GDP was 1.1%. During the first quarter of 2008, GDP grew 0.9%, but the second quarter of 2008 was the last for GDP growth, at 2.8%. Second quarter GDP was helped by the $168 billion Federal tax rebate, which spurred consumer spending and drove economic growth. GDP receded (0.5%) in Q3-08, and then declined sharply in Q4-08, by (6.2%).

The 2008 quarterly results for the overall exhibition industry reflected the pattern of GDP, as the industry grew 0.5% in the first quarter of the year, was flat in the second quarter, and then declined in Q3 and Q4, at rates of (6.0%) and (5.7%), respectively.

Looking Forward

Leading economists predict that the U.S. economy will not recover before the second half of 2009, and possibly not until the first quarter of 2010 or beyond. The National Association for Business Economics, a panel of 47 leading economists, forecasts GDP to decrease (5.0%) and (1.7%) in Q1 and Q2 2009, respectively, before growing 1.6% in the second half of the year. Overall, GDP is forecast to decline (0.9%) in 2009.

Some sub-sectors of the exhibition industry are better positioned than others for more immediate growth, due to spending provisions in the economic stimulus packages. For example, billions of dollars are earmarked for the education, healthcare, energy, construction, technology, and infrastructure markets. Plus, consumer spending might be stimulated by proposed tax cuts and a mortgage rescue plan that could reduce monthly mortgage payments for millions of homeowners.

Key Metrics to Watch

After eight years of data collection via the CEIR Index, some key exhibition industry trends have emerged that are worth watching as potential predictors of recovery:

• Net Square Feet and Exhibitors – these two metrics have proven to be leading indicators, of both recovery and contraction. Exhibition industry executives should monitor these two metrics carefully for signs of growth.
• Attendance and Revenue – these two metrics have shown to be lagging indicators and should not be relied upon by executives for signs of recovery.
• Professional Business Services, Consumer Goods, and Building and Construction – these three sectors are "guideposts" for the entire industry; as these sectors perform, so goes the industry.

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